TaxTMI 
TaxTMI 
2024 (4) TMI 1425
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....is prejudicial to the interest of revenue. It be held now. 2. Without prejudice to the above, it is submitted that observation and finding and mentioning by Ld. CIT that the order of Ld. A.O. is erroneous and prejudicial to the interest of revenue is totally incorrect as no error has been committed by the Ld. A.O. It is submitted that the Ld. A.O. has made full inquiries and the assessee has offered complete details of transactions related to shares of Kushal Limited Company being the only issue in assessment proceedings and Ld. A.O. had verified the same to his complete satisfaction. It is, therefore, submitted that the view so taken of holding that assessment order passed by the Ld. A.O. is an erroneous and prejudicial to the interest of revenue is incorrect and illegal and accordingly, the direction to set aside and to verify this in the manner and method set out by Ld. CIT himself is not correct on the facts and law and the same be held now. 3. Without prejudice to the above, the Ld. CIT has erred in passing the order u/s 263 of the Act, both on facts and on law, without appreciating the detailed submission filed before the Ld. A.O. as well as filed before him....
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....s. 89,04,447/-, resulting in gain of Rs. 51,16,561/ -. The ld. CIT (IT & TP) was of the view that, despite the above information available on record, the Assessing Officer had finalized the assessment order accepting the returned income "without making necessary inquiries or verification" in this regard. The above facts find mention at paragraph Nos. 2 & 3 of the ld. CIT (IT & TP)'s order as under :- "2. Subsequently, the assessment was selected for review. On perusal of case records, it is noticed that in this case there was information available to the Assessing Officer (AO) on the Insight portal of the Department that a Search and seizure action u/s. 132 of the I.T. Act was carried out in the Kushal Group of Ahmedabad on 05.02.2019, wherein certain incriminating evidences regarding price rigging in the scrip of M/s. Kushal Limited was found. Further on investigation by the Investigation Wing, it was found that there were systematic evidences of cash transaction entered by Kushal Group providing long term capital gain/loss or short term capital gain/loss. For ready reference, the excerpt of information relating to the assessee is tabulated hereunder: ....
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....fficer had accepted the impugned transactions as genuine, without making necessary inquiries in relation to the same considering the information available with him and the same had caused prejudice to the Revenue since the impugned short term capital gain had been taxed @ 15% only instead of 30% which was an applicable tax rate in the case of the assessee. The ld. CIT (IT & TP) accordingly held the assessment order to be erroneous and prejudicial to the interest of the Revenue, and set aside the order for de-novo assessment, directing the Assessing Officer to make a fresh assessment after giving due opportunities of hearing to the assessee. The relevant findings of the ld. CIT (IT & TP) at paragraph Nos. 8 & 9 of his order are as under :- "8. I have gone through the reply of the assessee and it is considered and kept on record. However, the same is not found to be acceptable for the reasons summarized as under. 8.1 The assessee has submitted that she has made investment in shares and Mutual funds for which funds in her NRE account were used. It is also submitted by the assessee that shares of Kushal Limited were purchased in ordinary course just like any othe....
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.... year. The assessee has claimed said STCG in order to route her unaccounted money. In fact, the bogus income in the instant case would be taxable at a special rate as per provision of section 115BBE of the I.T. Act. 8.3 Here, it is pertinent to discuss something about accommodation entry. The Accommodation entry is a financial transaction between the two parties where one party enters the financial transaction in its books to accommodate the other party. These transactions are accommodation entries mostly in lieu of cash of equal amount and commission charged over and above at certain fixed percentage for providing such accommodation entry. These accommodation entries are taken by various beneficiaries for introducing their unaccounted cash into their books of accounts without paying the due taxes. The above said modus operandi was found during the Search and Seizure operation in the Kushal Group and the assessee was found one of the beneficiaries of availing accommodation entry. In similar circumstances, Department's finding has been upheld by various Courts, latest being the Hon'ble High Court of Kolkata in a recent judgment delivered on 14-06-2022 in the case of....
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....ider the provisions of the I.T. Act, 1961 and accepted the contention made by assessee without making inquiries or verification, which should have been done. The assessment was finalised u/s. 143(3) r.w.s. 147 of the I.T. Act on 29.03.2022, accepting returned income i.e. Rs. 72,33,120/- declared in response to notice u/s. 148 of the I.T. Act. Therefore, the assessment order passed by the AO is erroneous in so far as it is prejudicial to the interest of Revenue. 8.5. Reliance is placed on explanation 2 to section 263 of the Act in which it is clearly stated that any order passed by the AO shall be deemed to be erroneous in so far as it is prejudiced to the interests of the revenue, if the order is passed without making inquiries or verification which should have been made or if the order is passed allowing any relief without inquiring into the claim. The AO while passing the order did not consider the provisions of the I.T. Act, 1961 and has accepted the contentions made by the assessee without making inquiries or verification, which should have been done. 9. In view of the above mentioned facts of the case, the order u/s 143(3) rws 147 of the Act passed by th....
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.... AO, dated 18.03.2022; (d) Copies of documents submitted vide above acknowledgment in response to notice issued u/s 143(2) of the Act; (e) Copies of acknowledgements for compliances made in respect of notices issued during assessment proceedings and revision proceedings u/s 263 of the Act along with relevant annexures; (f) Acknowledgment of reply filed against notice u/s 142(1) of the Act, before the AO, dated 01.02.2022; (g) Acknowledgement of reply filed against notice us/ 143(2) of the Act, before the AO, dated 28.03.2022 (II) That the ld. CIT (IT & TP) was informed about all investigations carried out by the Assessing Officer during the assessment proceedings vide letter dated 28.10.2022 and 16.12.2022, placed before us at paper-book page Nos. 57 to 59. All evidences filed to the Assessing Officer proving the genuineness of the transactions were again filed to the ld. CIT (IT & TP). 6. The ld. Counsel for the assessee contended that, in view of the above, it was sufficiently established that the Assessing Officer had made necessary inquiries with respect to the issue and had formed a plausible view that the transaction of tra....
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....ires having been conducted on the issue. 11. We have gone through the questionnaires raised by the Assessing Officer during the assessment proceedings and there is no doubt that the Assessing Officer did inquire from the assessee regarding the trading in shares of M/s. Kushal Limited. We have also gone through the reply filed by the assessee to the Assessing Officer placed in paper-book, and we have noted that the assessee explained the genuineness of the transactions by pointing out that she was a NRE whose only source of income was through trading in shares of various companies, that too through a broker M/s. IIFL Securities and the transactions being sourced from her NRE account. All evidences were placed before the Assessing Officer, including her NRE account, broker's statement and the details of all the scrips traded in during the year which revealed that she had earned short term capital gain on trading in 21 scrips amounting to Rs. 72,33,120/- and which included the scrip of M/s. Kushal Limited also, and long term capital gain on trading in scrips of 7 companies amounting to Rs. 15,627/-, which included loss incurred also in some cases. Based on this reply ....
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....that there are some important facts and information relating company Kushal Ltd, which clearly proves that the company has such golden history, which can attracts any investor who is doing regular investment activities. 1. Management of company: The Company is promoted by Mr. Sandeep Agrawal on 3rd March, 2000 (i.e. age of company is 21 years) who is Chairman and Managing Director. He has professional and business experience of more than 25 years in the area of business trading, finance, human capital management, embracing change and providing overall leadership and direction to the Company. There were other Directors who are also associate with the company since incorporation. II. Business Profile: Kushal Tradelink is one of the leading importers of waste paper, which is recycled and made into corrugated paper for the packaging industry, without any additional deforestation. As a business philosophy, it believe in "brown- field" growth over "green-field" growth. In other words, they do not build factories from scratch, but they find it economical to buy out existing capacities in the marketplace at reasonable price and make them more efficient b....
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.... five years of the company is as under: Particulars 2016-17 2015-16 2014-15 2013-14 2012-13 Revenue from Operations/Total Operating Income (TOI) 2,35,958 1,58,990 43,301 30,252 24,614 Other Income 97 87 66 32 -3 Total Revenue 2,36,056 1,59,077 43,367 30,284 24,611 Finance Cost 387 1,044 1,134 992 628 Depreciation & Amortisation 63 64 52 27 24 Earnings before Interest, Tax, Depreciation & Amortisation 16,107 11,689 2,108 1,689 1,260 Profit Before Tax 15,658 10,581 922 669 607 Tax 1,642 792 265 220 199 Profit After Tax 14,016 9,789 657 449 ....